Tenant screening could cost you rental
|By Claes Bell Bankrate.com
The process of finding the perfect
rental house or apartment can range from hectic to nearly impossible. But it could
be worse: Picture yourself locating that long sought-after apartment or town house
only to be rejected by your prospective landlord because of a negative report
from a company you've never heard of.
Sound like a nightmare? Unfortunately, for many Americans
it's all too real.
Of the approximately 37 million rental units in the
U.S., 17 million are overseen by professional property managers.
Many landlords, especially those who supervise large multifamily
apartment buildings, rely on tenant screening bureaus to check the
background of potential customers. These companies collect information
from court records, police blotters, credit bureaus and other sources
to help identify risky tenants before they become headaches.
Sounds reasonable, right? Unfortunately, because
of the way these screening services collect and store information, responsible
tenants can sometimes be branded as risky and can be at a serious disadvantage
in tight rental markets.
As with nearly all money matters,
one of the most important factors in determining whether you'll pass a tenant
screening bureau check is your credit
history. Almost every tenant screening company runs a credit check through
at least one of the big three credit reporting agencies: Equifax, Experian or
"They're going to look at consumer credit data,"
says Steve Katz, director of corporate communications at TransUnion, which entered
the tenant screening industry in 2004 through the acquisition of RentPort, Inc.
"They have to make sure that the individual has a history of being able to meet
their financial obligations."
But credit reports are only part of the overall screening
process. Tenant screening bureaus collect information from a surprisingly wide
range of sources, including utility companies, state governments and even clerks
of court. One particularly controversial practice involves sifting through civil
court records and archiving the names they find, effectively creating "blacklists"
of every tenant that has been involved in litigation with a landlord.
country's largest tenant screening company, First Advantage SafeRent, recently
settled a case alleging that they had intentionally provided incomplete information,
purposely excluding the verdicts of tenant-landlord lawsuits in their tenant reports
to landlords. The reason: The verdict, even if it showed the tenant to be clearly
in the right, was irrelevant; that they had been involved in a suit was enough
to make them a serious risk for a prospective landlord.
is no way to keep yourself out of a database," says James B. Fishman, a New York-based
attorney specializing in the rights of tenants and consumers, who represented
Adam White, the tenant who brought the SafeRent suit. "If you try to enforce your
rights under the law, then a landlord could retaliate and sue you, and that gets
you blacklisted." A spokesman for First American SafeRent declined to comment
for this story.
Although the companies that engage in the
creation of these blacklists are under considerable pressure to change the way
they do business, what they are doing is technically not illegal. In fact, many
municipalities, including the City of New York, routinely sell records of tenant-landlord
disputes en masse to any tenant bureau that wants to buy them.